Low-Cost Builder Plans Shift to Upscale Homes for O.C. Site : Location: Construction giant known for no-frills housing will build 144 of its most expensive houses on 37 acres at Dana Point.
Kaufman & Broad, which became the largest home builder in the West by offering low-cost, no-frills homes in inland areas across California, is moving to the coast.
On 37 acres in Dana Point, the Los Angeles-based builder plans to construct its most expensive homes yet, several of which will feature views of the Pacific Ocean.
Prices will start at about $250,000, although houses with the best ocean vistas will cost nearly $400,000. That’s expensive for Kaufman & Broad, whose average home price in California is $162,100.
However, the 144 homes in the company’s California Cortina project are modestly priced compared to the multimillion-dollar mansions that typically sit on similar coastal lots.
“We’re selling homes with ocean views to the heartland of America,” said Roland Osgood, president of Kaufman & Broad in Newport Beach.
Larry Webb, president of Greystone Homes in Newport Beach and a former president at Kaufman & Broad, predicted that the project will be a success. “Those prices aren’t scary at all for Orange County,” he said.
Osgood said the Dana Point project is a variation on Kaufman & Broad’s established business theme, rather than an indication of a whole new strategy. The builder has tried unsuccessfully in the past to break into the so-called move-up market--selling consumers more costly second or third homes. But it never succeeded in convincing buyers that it could compete with builders known for luxury homes.
“They have a formula that they live by, and that formula is entry-level homes,” said John Shumway, president of Market Profiles, a real estate consulting firm in Costa Mesa. “They make a well-designed product and market it to the hilt. It’s like McDonald’s. They are a production line builder, but they do it with a lot of merchandising savvy.”
In fact, Kaufman & Broad successfully survived the real estate downturn by sticking to what it does best: offering entry-level homes. The company built 5,952 homes nationwide last year to post revenue of $1.24 billion, up 13% from $1.09 billion for 1992.
The Dana Point homes will have three or four bedrooms and will range in size from 1,591 to 1,953 square feet. The Mediterranean-style project will be in the gated community of Monarch Beach at the northwest corner of Niguel Road and Corniche Drive.
Ivy Schneider, a housing analyst with the brokerage Salomon Brothers in New York, hailed the venture as a wise move by Kaufman & Broad, which she follows closely.
“I view this as a good opportunity for the company,” she said, “though I wouldn’t necessarily view a major push toward the high-end housing market as necessarily beneficial for them at this time.”
Kaufman & Broad’s Osgood, who has been involved in the Southland home building industry since 1968, is betting that the venture will succeed not only because of the ocean view but also because of the little extras. The homes will have features not typically found in their price range: better appliances, glass insets in wood-paneled garage doors, double-pane windows, large back porches.
“A Ford works, and a Rolls Royce works. These homes will be the Rolls Royce of Kaufman & Broad but not of the entire industry,” Osgood said. “We’re just taking reservations, we have about 30 people now who are looking at lots, so we think this will be very successful.”
Confident of its success, the company bid aggressively for the lots, which it purchased this year from San Diego developer R.B. McComic Inc.
Residents in neighboring areas did not have the same faith, however, and raised questions at Dana Point Planning Commission meetings about the quality and features of the houses being planned.
“The homeowners were real concerned about compatibility of the new homes with their current dwellings, but Kaufman & Broad was receptive to those concerns and made some design changes, such as the style of the garage doors,” said John Sherwood, assistant planner for the city.
Among details on which Kaufman & Broad architects negotiated were colors for exterior walls and roof tiles. On April 6, the planning commission gave final approval for the project.
“The homeowners were disappointed that the product we live in was not continued, but we were successful in getting them to include features that we think keep the neighborhood looking harmonious,” said Frank Alvarez, president of the homeowners association in neighboring Corniche Sur Mer. “We wanted to minimize the differences so property values would be maintained.”
California Cortina at a Glance
* Builder: Kaufman & Broad
* Location: Dana Point overlooking the Pacific Ocean
* Size: 37-acre gated community
* Homes: 144 homes will be constructed in seven or eight phases. Three floor plans, ranging in size from 1,511 to 1,953 square feet. Three or four bedrooms and two and one-half baths. Each will have two- or three-car garage.
* Price range: $250,900-$400,000
* Opening: Models open in July.
Source: Kaufman & Broad
Researched by JANICE L. JONES / Los Angeles Times
